Subscribe to our Blog via email

Art Gardner, a Republican patent attorney seeking election to the U.S. Senate in Georgia, has recently proposed a reform to the nation’s patent laws to address the artificially high price of prescription medicines in the U.S.

Specifically, Gardner proposes to make it patent misuse to charge much more in the United States for the same drug than in the rest of the G7. According to Gardner, “it would be presumptive patent misuse to charge more than 125% of the average price in the other 6 countries in the G7 and it would be conclusive patent misuse to charge more than 150%.” This innovative change would be a simple change in the U.S. patent laws and would be very impactful. Said Gardner, “If the patent is being ‘misused’ in this way, the patent would be invalidated and/or unenforceable, opening up competition for generics. So the owner of a drug patent would have a strong interest in avoiding losing the protection of the patent and would hold down U.S. prices and/or drive up prices around the world. Either way, we (the U.S. consumers) would over time end up paying the real price of patented medicines, not the exaggerated price which includes a subsidy for foreigner consumers.”

Patent misuse is currently a defense to enforceability of a patent. Gardner’s proposal would be a significant expansion of the patent misuse doctrine, and one that would no doubt face substantial hurdles since the pharmaceutical industry would be guaranteed to protest.

Still, Gardner does make an interesting point on some levels, which is one that we have made here in the past. US consumers subsidize cheaper drugs for the rest of the world, which is undoubtedly one of the reasons that health care costs are out of control.

“I have long considered it terribly wrong that we pay a monopolized market price for medicines covered by patents in the U.S., while in most other G7 countries the local (national) government sharply controls the maximum price that the pharmaceutical companies can charge. This causes consumers in the U.S. to pay much, much more for the same drugs as sold in other countries.” Indeed, this price disparity has created the cottage industry of people driving across the Mexico and Canada borders to buy cheaper drugs. Gardner goes on to say, “The net result is that the U.S. consumer is paying much more than he/she ought to and the foreign consumer is paying a good bit less than he/she ought to. So in effect, the U.S. consumer is subsidizing low drug costs for foreigners. To me, forcing the U.S. consumer to subsidize foreign drug prices is outrageous.”

Gardner was the only candidate on the Republican side who did not appeal in a recent poll. Although his campaign continues, at this point there is little reason to believe that he will achieve the nomination against the well known candidates at the top of the field. Seriously raising the question of controlling costs for prescription drugs could, however, get him some attention.

The Author

Gene Quinn
is a patent attorney and the founder of IPWatchdog.com. He is also a principal lecturer in the PLI Patent Bar Review Course, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam.

Gene’s particular specialty as a patent attorney is in the area of strategic patent consulting, patent application drafting and patent prosecution. He has worked with independent inventors and start-up businesses in a variety of different technology fields.

Gene is admitted to practice law in New Hampshire, is a Registered Patent Attorney licensed to practice before the United States Patent Office and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. As a patent attorney he is able to represent inventors and businesses seeking patents across the United States.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 10 Comments comments.

EGMarch 25, 2014 11:13 am

Gene,

With all due respect, what Gardner proposes is myopic. We don’t need to impose patent misuse and we do, there will be minimal, if any, investment in new drug development (most of which is now coming from smaller R&D companies, no big pharma).

The problem here is that the rest of the world (ROW) imposes economically unrealistic price controls on drugs, and in the case of many countries such as India, Ireland, etc., compulsory licensing of patents covering drugs, whereas the US does not (and in my opinion, rightly so). Someone has to pay for the R&D for drug development (now anywhere from $1-4 billion), and because of price controls in the ROW, the US consumer is primarily the one to pay for that R&D.

What the ROW does with price controls on drugs, as well as compulsory licensing, in my view, makes a mockery of GATT and TRIPS. And the ROW is also hypocritical in this regard because you should have heard them “scream” in the World Court at the Hague how our 337 Actions in the ITC for “unfair trade practices” resulting from imports infringing IP was a GATT violation. Unfortunately, our US Trade Representative is too chicken to hold our ROW partners “feet to the fire” for such hypocrisy.

Gene QuinnMarch 25, 2014 11:56 am

EG-

I completely agree with you. It is the price controls in the rest of the world that are the problem. That is what leads US consumers to subsidize cheap drugs for the rest of the world.

Something does need to be done about this. It is fundamentally unfair and unjust for Americans, many of whom are poor or on fixed incomes to be forced to either subsidize the rest of the world or violate US law by going to Canada for drugs.

-Gene

AnonMarch 25, 2014 12:44 pm

What are the chances that any sense of geographical market segmentation will take a hit in the patent world as it did in the copyright world from the Kirtsaeng case?

Another area to be careful for what one wishes for.

MosheMarch 25, 2014 2:30 pm

This should be limited patents owned by companies from countries where there are government-imposed price-caps (or compulsory licensing) on pharmaceuticals If the Canadians want to impose price caps on drugs, then Canadian pharma companies will be forced to charge the G7 prices in the USA. If the Canadian pharma companies don’t like it, they can lobby their government. But the way it is proposed now, ethical pharma companies get punished TWICE — once by foreign gov’ts which cap the price of their products, and now in the USA where they cannot enforce their patents
Foreign countries will have to choose between proper IP protection without price-caps/compulsory licensing OR having a vibrant pharmaceutical industry.

MaxDreiMarch 26, 2014 4:17 am

Remind me, how did the US Govt pressure Bayer into seeling CIPRO to it cheap? Oh yes, I remember:

Archives

At IPWatchdog.com our focus is on the business, policy and substance of patents and other forms of intellectual property, such as copyrights and trademarks. Today IPWatchdog is recognized as one of the leading sources for news and information in the patent and innovation industries. In January 2014 we were honored to be inducted into the ABA Blawg Hall of Fame after being recognized for 3 years as the top IP blog on the Internet.